The October US jobs report came in much stronger than expected: employers added 165,000 jobs, far above forecasts of about 59,000-65,000. Unemployment ticked down to 4.1%, and average hourly earnings rose 0.4% month-over-month and 3.1% year-over-year. The report hit after a sharp AI-driven selloff in tech; markets took the strong data as a reason to raise odds of a December Federal Reserve rate hike.
Hiring was boosted by professional and business services, health care, and transportation/warehousing, while restaurants and construction shed jobs. The strong wage number plus sticky inflation made traders more confident the Fed may hike again in December, with odds rising to near 73%. The data also landed just after midterm elections and AI-sector worries had already rattled markets.
The week did combine the US midterm elections, the October jobs report, central bank meetings, and major AI/tech earnings, with tech entering the week under pressure after AI-driven selling. The hedge-fund detail was not independently confirmed.
October nonfarm payrolls rose 165,000, about 2.5x the consensus estimate of roughly 65,000. Unemployment was 4.1%, and average hourly earnings rose 0.4% month-over-month.
Wall Street expected about 59,000-65,000 new jobs, 4.2% unemployment, and 0.3% monthly wage growth. September originally added 29,000 jobs.
AThe October jobs report landed at a hundred sixty-five thousand jobs, about two and a half times what Wall Street expected.
BThat is a beat. NOVA TRADING TEAM posted the breakdown on X and led with 'surprise.' I'd call it a broad, strong report.
AUnemployment fell to four point one percent. Average hourly earnings rose zero point four percent on the month.
BProfessional services, health care, and transportation and warehousing all added jobs. Restaurants and construction lost some.
AConstruction losing jobs is a warning sign. Rate-sensitive parts of the economy are already feeling the pinch.
BConstruction was cooling for two years. The surprise is that health care and transportation still want workers.
AWhich is exactly why a December hike is a risk. The parts of the economy that suffer first from higher rates are already contracting.
BYou cannot hold rates forever because construction is weak. The Fed's mandate is not to keep every sector in a boom.
ACollin Martin at Schwab called it, and I quote, 'a relatively strong jobs report across the board.'
BAnd it landed after tech got slammed on AI infrastructure fears and a messy election result. A solid labor market should quiet some of that recession talk.
AQuiet, maybe. But the wage number is the reason markets immediately started pricing a December Fed hike.
BBecause that's the right reaction. Wages up zero point four monthly is too hot when inflation is still sticky.
AIt's one month. You cannot annualize a single payroll print and call it a trend.
BIt's not one month. It's been several months of wage growth over three percent a year. That is a labor market with pricing power.
APricing power for workers is not a crime. Rising real wages is the point of full employment.
BThe point is wages rising faster than productivity feeds inflation. Then the Fed has to overcorrect later.
ASo your answer is to hike now, cool demand, and hope the labor market doesn't crack?
BMy answer is the Fed should not go soft because a bad week in tech scared a few hedge funds.
AIt wasn't just hedge funds. Liz Ann Sonders at Schwab said the selling was real, broad, and tied to questions about how fast the AI buildout can go.
BThat's a valuation debate, not the real economy. The jobs number says the real economy is fine.
AFor now. The report is backward-looking. Data centers are getting built with borrowed money, and companies are already rethinking the pace.
BSo we should ignore the strongest signal we have because something might break later? That's how you miss every turn.
AI'm not saying ignore it. I'm saying the Fed's December decision shouldn't hinge entirely on one report.
BIt won't. It'll hinge on the trend, and the trend is solid hiring and firm wages.
AThen why did you say the market was right to price a hike?
BBecause it is. But the Fed will still wait for more data. That's the boring reality.
ABoring? We just spent five minutes arguing about a quarter-point move.
BThat quarter point moves trillions in bond markets. That's not boring, that's the whole ballgame.
AThe market reaction also tells you something: traders looked at a good jobs number and sold stocks because they feared the Fed.
BThat is exactly the inverted logic the Fed created. Good news for workers becomes bad news for asset prices.
AAnd that is a fragile setup. The Fed has to care about both, but it can't keep everyone happy.
BIt shouldn't try. It should keep inflation from becoming embedded. Full stop.
AEven if the cure is worse than the disease?
BThe disease is what happens when wages and prices chase each other. That cure is far worse.
AThat's a bet. Hope it ages better than most market forecasts.
BDifferent corner of the market: an account on X called Rocket Terminal says Larry Fink has warned of a global recession.
AThat one's thin. No official statement from BlackRock, no transcript—just the account's word.
BWhat's true is BlackRock manages roughly eleven trillion dollars. So even a rumor about Fink moves the conversation.
ABut the post ties it to the Iran conflict and energy markets. Neither part is something we can stand behind.
BI'm not standing behind it. I'm saying the underlying fear is legitimate: an oil shock would complicate everything.
AAgreed, but let's separate the real oil risk from a made-up recession call by the world's largest asset manager.
BFair. Oil is the wildcard. The rest is unverified noise with a big name attached.
AAnd noise is the one product this market never runs out of.
BUntil that man actually speaks, the rumor is the trade.